Legal Smuggling Regarding Land Ownership Between Indonesian Citizens and Foreign Citizens Through Name Borrowing Agreements

Abstract

Land ownership is a prevalent investment choice in Indonesia. However, the regulation stated in Law Number 5 of 1960 concerning Basic Agrarian Principles, which restricts land ownership rights exclusively to Indonesian citizens, is increasingly circumvented through indirect foreign ownership. The "name lending" agreement has become a popular mechanism for foreign nationals to acquire land rights indirectly. This study aims to examine the emergence of name lending agreements as a form of legal smuggling and propose procedures to mitigate this practice to uphold the integrity of land ownership regulations. Using a doctrinal research method and secondary data analysis, this research identifies the root cause of name lending agreements as the disparity between the land ownership rights granted to Indonesian citizens versus foreign nationals. The findings suggest that addressing this issue requires specific legal provisions and the enforcement of strict sanctions against violators. The implications of this study emphasize the need for a robust legal framework to deter name lending agreements and protect the principles of land ownership in Indonesia.